In a move that is certain to shake up the Canadian kids entertainment industry, DHX Media, parent company of Decode Entertainment and Halifax Films, has acquired Vancouver, Canada-based Studio B Productions.
The deal terms include an initial cash payment of US$8 million against a total purchase price of 4.5 times the average of Studio B’s fiscal 2007 and 2008 earnings before interest, up to a maximum amount of US$20 million.
‘We have been trying to grow, and the quicker path to growth is to align with companies that are like-minded in vision and infrastructure,’ Studio B founding partner Blair Peters told KidScreen Daily this morning. ‘We are getting bigger, but not fatter,’ he added.
The company will continue to operate under its current structure alongside DHX Media’s other subsidiaries with Peters and partner Chris Bartleman remaining as co-CEOs. The toon house will also keep its Vancouver studio open and, for the foreseeable future, staffing levels will stay the same.
Currently, Studio B has seven shows on the slate, including Kid vs. Kat currently in production with Canadian tooncaster YTV, and preschool series Martha Speaks, a co-pro with Boston, Massachusetts-based WGBH.
President of Decode Entertainment and DHX board member Steven DeNure said the deal was a natural. ‘We have always had the capacity to sell more things than Decode [Entertainment] and Halifax [Films] can produce,’ he said. ‘We think we need more comedy series for kids six to 10 on our sales side, and Kid vs. Kat is the kind of show that we might not develop at Decode Entertainment, but that we’d love to have in Decode Enterprises’ sales portfolio.’
The deal also gives Studio B properties access to DHX’s ancillary businesses that include online, mobile and merchandising and licensing channels – a prospect that Peters finds enticing. ‘We were trying to do all of that on our own,’ he says. ‘Now, we are hoping to plug that into Decode’s team.’
Denure says that the acquisition is in line with publicly traded DHX’s growth strategy. ‘We need to be of a certain size and have growth prospects and momentum,’ he says. ‘We think this is a great, smart, logical consolidation here, particularly in the kids business.’